Pilipinas Shell Petroleum Corporation

plant reliability in 1Q17 ... prospective investors are cautioned that there are various calculation methods, ... Pilipinas Shell Petroleum Corporatio...

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Pilipinas Shell Petroleum Corporation 2Q 2017 Analysts and Investors Briefing August 2017

Pilipinas Shell Petroleum Coproration

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Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES References in this presentation to “our Company” or the “Corporation” and to “PSPC” refer to SHLPH. The words “we”, “us” and “our” are used to refer to SHLPH or to those who work for SHLPH. This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of SHLPH. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of SHLPH to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of SHLPH and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the disclaimer contained or referred to herein. Audience should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in SHLPH Annual Report for the year ended 31 December 2016 (available at http://pilipinas.shell.com.ph/investors/financial-reports.html and http://edge.pse.com.ph). These risk factors also expressly qualify all forward looking statements contained in this presentation and should be considered by the audience. Each forward-looking statement speaks only as of the date of this Annual Meeting, 16 May 2017. Neither SHLPH nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. Pilipinas Shell Petroleum Corporation

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Robust financial performance ▪ EBITDA adjusted for COSA: ↑ 9% y/y to PHP 6.8B

Summary

▪ Cash flow from operations:

Pursue profitable fuel growth opportunities

Capture nonfuels growth opportunities

Reliable & efficient manufacturing & supply chain

Leading corporate governance & World class talent development Pilipinas Shell Petroleum Corporation

Fueling progress for the Filipino

↑ 26%

y/y reaching PHP 7.8B

▪ Consistently strong Balance Sheet: gearing

↓ 22%

Cutting-edge fuel technology and effective marketing strategies ▪ For 1H17 vs 1H16 • ↑ 4% in retail network sales volume

• • ▪ ▪ ▪

↑ 9% in V-Power Gasoline sales volume ↑ 15% in V-Power Diesel sales volume

27% Premium Fuel Penetration Double digit growth in Non-Fuels Retailing business Commercial business rebounded from structural decline in power demand

Leverage on a reliable and efficient E2E chain ▪ NMIF cost savings exceeds expectation ▪ Successful completion of planned refinery maintenance Leading Corporate Governance & World class talent development ▪ Big winners in Shell Global Retail Smiling Stars Awards in NYC ▪ Awarded Company of the Year and a Special Citation in Social Accountability by Employers Confederation of the Philippines 3

Robust 1H17 Net Income delivering 56% of FY16 NIAT despite planned refinery shutdown FY ROE

-242.1%

13.8%

1H ROE

Delivered strong earnings despite

22.9% 16.3%

12.3%

6,329

6,200 56% of FY16

4,773

Lower inventory holding gains due to softer global oil prices Delivered 26% increase in Sufficient to finance capex and CFFO dividend payment

2,760

2,949 -1%

7,444

(529)

FY16 1H14 Net Income Pilipinas Shell Petroleum Corporation

3,963

5,072

4,191

1H15 1H16 1H17 Cash Flow from Operations (CFFO)

Sales volume (ML)

Net Income & CFFO (PHPm)

7,843

Planned refinery preventive maintenance shutdown

156

318

1,037

1,117

1,567

1,514

1H17 1H16 Retail Commercial Others 4

Strong underlying performance: EBITDA adj. for COSA increased by 9% vs same period last year EBITDA adjusted for COSA (PHPm)

-PHP5B

-PHP8B

-PHP11-12B

12,317 10,138

FY 1H

-PHP7B

9%

3,760 1,904

6,825

6,259

6,809

2014

2015

2016

1H 2017

 Sales volume growth  Increased logistics and

transshipment costs due to public infrastructure damage caused by Typhoon Glenda

 Retail sales volume growth;  Increase in premium fuel improved margins from network rationalization  Strong refining margins  Refinery EURO 4 upgrade

penetration; network growth  Unplanned refinery shutdown  Weaker refining margins

1H17 result covers 67% of our FY16 EBITDA adj. COSA

 Retail volume growth;

premium fuel penetration  Strong refinery margins; plant reliability in 1Q17  Crude abandonment provision reversal  Planned refinery preventive maintenance downtime

Prospective investors are cautioned that Cost of Sales Adjustment (COSA )and EBITDA (and any adjustments thereto) are in all cases not measurements of financial performance under PFRS and investors should not consider them in isolation or as an alternative to profit or loss for the year, income or loss from operations, or as an indicator of the Company’s operating performance or as a measure of liquidity or any other measures of performance under PFRS. Although other oil refiners use similar measures, prospective investors are cautioned that there are various calculation methods, and the Company’s presentation of COSA may not be comparable to similarly titled measures used by other companies.

Pilipinas Shell Petroleum Corporation

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V-Power and Non-fuel retailing drives the Retail business

Retail Key Performance Drivers

New V-Power with DYNAFLEX technology launch in June 8 increased V-Power Diesel and Gasoline uptake by 15% and 9% vs 1H16, respectively

5%

7%

Sa l es volume (ML)

Retail network volume increased by 4% from 1H16 to 1H17 despite >10% increase in pump prices

Stellar Retail performance due to successful marketing campaigns

811 769

756

1Q17

2Q17

2Q16

Note: Volume includes retail fuels and lubricants; Increase driven by Summer promotion and New V-Power launch in June

Convenience retailing enjoyed double-digit growth vs 1H16

NFR Store growth as of 1H2017 20 new Shell Select Total of 85 Shell Select

Opened 12 new retail stations in 2017

9 new Deli2Go Total of 28 Deli2Go

18 new Shell Helix Oil Change+ outlets Total of 131 Shell Helix Oil Change+ outlets

17 new Shell Lube Bays Total of 244 Shell Lube Bays Pilipinas Shell Petroleum Corporation

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Retail kick-starts construction of low carbon sites

#makethefuture 25% of site electricity bill savings

UN Avenue, Manila

Future 2017 NTIs equipped with solar panels

Zamboanga City Fitted with battery option

Dahlia City

CSC Road, Talisay City

Site fully consumes harvested energy Pilipinas Shell Petroleum Corporation

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Despite structural change in power sector, Commercial Business rebounded by 8% from 1Q17 to 2Q17

Sales volume (ML)

8%

-3%

498

539

556

1Q17

2Q17

2Q16

Commercial fuels sales grew by 9% vs 1Q17

Note: Commercial volumes include commercial fuels, lubricants and bitumen sales.

Won contracts from power and other sectors

Pilipinas Shell Petroleum Corporation

Strong wholesale segment sales

Commercial volume closed from 11% decline in 1Q17 vs 1Q16 to 7% in 1H17 vs 1H16

Aviation sales grew by 7% vs 1Q17 8

Maintaining a reliable refinery through planned preventative maintenance

Fit for next major turnaround in 4 years

Project tie-ins and statutory compliance Flare upgrade

Pilipinas Shell Petroleum Corporation

Focus on Safety No Fatal incident No Lost Time incident Zero environmental noncompliance

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Consistently strong balance sheet

6,200

4,773

5,656 4,393 3,737

1H16

Dividends

1H17

Free Cash Flow

Note: Dividends for 2016 was declared and paid in the second half of the year. 2H16 dividends is plotted against 1H16 CFFO to provide a relative comparison of the amount of dividends vs CFFO

16.4

17.0

13.1

FY14

FY15

FY16

1Q17

2Q17

14.9%

20.0%

16.3% 13.3%

50 30

-0.7%

5.0%

20 10

15.0%

10.0%

40

0

Pilipinas Shell Petroleum Corporation

22%

ROACE (%)

CFFO

23%

18.7

60

1H15

27%

44.6

70

1,791 1H14

37%

1H ROACE continues to be high at 13% Ave. Capital Employed (PHPb)

Cash Flow (PHPm)

6,329

92% Gearing Ratio (%)

7,843

Gearing at 22% with lower borrowings Borrowings & LTD (PHPb)

CFFO generated more than sufficient to cover capital investments (PHP2.2B) and 2H16 dividends paid (PHP2.6B)

57.6

41.8

45.9

48.0

1H14

1H15

1H16

1H17

0.0% -5.0%

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Leading corporate governance, world class talent development, and partnership with the Filipinos in nation building

Corporate Empowerment

Governance

Environmental Social

Filipinos Company of the year Recognized Globally

Economic

Caring for the Community Pilipinas Shell Petroleum Corporation

Filipinos Recognized Globally 11

Update on our key strategies

Growth in Non-Fuel Retail Business

Aviation Supply Points Expansion

Premium Fuel Penetration and Network Expansion

North Mindanao Import Facility

Bitumen Production

Pilipinas Shell Petroleum Corporation

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